Individual consumption weighs on Bulgaria's economic recovery - UniCredit

Bulgaria will likely fail to unleash its full economic potential before the middle of 2012, as individual consumption recovery will continue to be hampered by low domestic demand and high precautionary savings, according to UniCredit's latest CEE report. The economists consider that the improvement in third-quarter indicators chiefly mirrors a steady rebound in Bulgaria's manufacturing competitiveness. The growth in exports, however, will not be sufficient to rescue the rest of the economy, with individual consumption turning into the weak spot of the country's recovery.

Furthermore, adjustments in the number of jobs in some domestic demand-oriented sectors is still in place, which weighs on the pace of economic revival. "The sharp contraction of individual consumption in the third quarter of 2010 highlights the household sector's need for more time to join the recovery," UniCredit Bulbank's chief economist, Kristofor Pavlov, said.Although data on domestic demand-oriented sectors is less encouraging, employment in export-led segments is improving, implying that "roughly a third of the economy is out of the red zone," according to the analysts. Furthermore, the pace of the economic recovery will also be curbed by structural reform delays, Pavlov added.

"Some investors seem confident that the toughest tests for the Greek recovery still lie ahead. This affects both the inflow of foreign capital and debt servicing costs for the Bulgarian economy," the economist noted. Meanwhile, growth prospects for the Bulgarian economy have been improving in recent months, which made UniCredit believe that the country's gross domestic product (GDP) will end in a positive territory at the end of 2010. Under the analysts' estimations, the country will post a modest 0.1% growth in GDP for the current year, which will improve to 2.8% in 2011.

News source: Dnevnik A.M. link: article

GDP per inhabitant in the Member States ranged from 44% to 271% of the EU27 average in 2009

In 2009, the Gross Domestic Product (GDP) per inhabitant in Luxembourg, expressed in purchasing power standards (PPS), was more than two and a half times the EU27 average, while the Netherlands recorded a level more than 30% above the average. Ireland, Austria and Denmark were between 20% and 30% above the EU27 average, while Sweden, Germany, Belgium, Finland and the United Kingdom were between 10% and 20% above average.

France, Italy and Spain registered GDP per inhabitant between 0% and 10% above the EU27 average, while Cyprus and Greece were between 0% and 10% below the average. Slovenia, the Czech Republic, Portugal, Malta and Slovakia were between 10% and 30% lower than the EU27 average. Hungary, Estonia, Poland, Lithuania and Latvia were between 30% and 50% lower, while Romania and Bulgaria were between 50% and 60% below the EU27 average. These data for 2009, 2008 and 2007, published by Eurostat, the statistical office of the European Union, are based on revised4 purchasing power parities, and the latest GDP and population figures. They cover the 27 EU Member States, three EFTA Member States, three EU Candidate Countries and four Western Balkan countries. 

News source: Eurostat link: publication

Decrease of Gross Domestic Product by 4.6% the 3rd Quarter of 2010

The Hellenic Statistical Authority announces the Gross Domestic Product for the 3rd quarter of 2010. Available data indicate that in the 3rd quarter of 2010, the Gross Domestic Product (GDP) decreased by 4.6% in comparison with the 3rd quarter of 2009 and by 1.3% in comparison with the 2nd quarter of 2010. As already reported, the GDP rate of change between the quarters of 2009 and 2010 should be treated with caution, due to the discontinuity of General Government data series. This issue will be addressed by the end of the year, with the backwards revision of General Government data.

Gross fixed capital formation (GFCF) decreased by 20.0% in comparison with the 3rd quarter of 2009. By asset, GFCF in dwellings decreased by 17.1%, in other construction by 10.4%, in other machinery and equipment by 25.4% and in transport equipment by 33.2%. Total final consumption expenditure recorded a decrease of 5.5% in comparison with the 3rd quarter of 2009. General government consumption decreased by 4.7%, while private consumption recorded a decrease of 5.8%. External trade deficit decreased by 42.2%, contributing positively to the GDP percent change.Imports decreased by 17.8% in comparison with the 3rd quarter of 2009. Imports of goods decreased by 22.2% while imports of services increased by 0.7%.

Exports decreased by 1.1% in comparison with the 3rd quarter of 2009. Exports of goods decreased by 2.6% while exports of services marginally increased by 0.04%. As regards the production approach of GDP, total gross value added decreased by 6.3% in comparison with the 3rd quarter of 2009 and by 0.2% in comparison with the previous quarter.

Increase in gross value added was recorded only in agriculture, forestry and fishing industry by 2.8%. On the other hand, the gross value added decreased in the other industries: manufacturing, mining, electricity, gas and water supply industry by 7.0%, construction industry by 13.8%, trade, hotels-restaurants, transport and communication industry by 11.9%, financial, real estate, renting and business activities industry by 2.2% and in other service activities industry by 1.7%.Compensation of employees, at current prices, decreased by 6.1% in comparison with the 3rd quarter of 2009. 

News source: Hellenic Statistical Authority link: publication

 

Euro area GDP up by 0.4% and EU27 GDP up by 0.5% +1.9% and +2.2% respectively compared with the third quarter of 2009

GDP increased by 0.4% in the euro area (EA16) and by 0.5% in the EU271 during the third quarter of 2010, compared with the previous quarter, according to first estimates released by Eurostat, the statistical office of the European Union. In the second quarter of 2010, growth rates were +1.0% in both zones. Compared with the third quarter of 2009, seasonally adjusted GDP increased by 1.9% in the euro area and by 2.2% in the EU27, after +2.0% in both zones for the previous quarter.

Variation in components of GDP. During the third quarter of 2010, household final consumption expenditure increased by 0.3% in both the euro area and the EU27 (after +0.2% and +0.3% respectively in the previous quarter). Gross fixed capital formation was stable in the euro area and rose by 0.2% in the EU27 (after +1.7% and +2.1%). Exports grew by 1.9% in the euro area and by 1.8% in the EU27 (after +4.3% and +4.0%). Imports increased by 1.7% in the euro area and by 1.6% in the EU27 (after +4.2% and +3.9%).

US and Japanese GDP increased. In the United States GDP increased by 0.6% during the third quarter of 2010, after +0.4% in the second quarter of 2010. In Japan GDP rose by 0.9% in the third quarter of 2010, after +0.4% in the previous quarter. Compared with the third quarter of 2009, GDP grew by 3.2% in the United States (after +3.0% in the previous quarter), and by 4.1% in Japan (after +2.7%). 

News source: Eurostat link: article

The Greek economy will start recovering in the second half of 2011

The Greek economy will start recovering in the second half of 2011 but will require additional austerity measures for 2012, while unemployment is expected to soar to 15 percent next year, the European Commission forecast yesterday in its report on the next two years. The acceleration of structural reform measures and the containment of any salary increases are essential for the country’s financial streamlining, while Brussels believes that the gap in 2010 budget revenues was the main reason behind the prime minister’s decision to take extra austerity measures for 2011.

Greece’s big challenge over the next couple of years will be to return to growth while continuing its effort to reduce its deficit, the Commission estimates in its fall report. The austerity measures will continue to hinder Greek growth into 2011, the year when the country’s gross domestic product is set to decline by 3 percent. However, the first signs of recovery are set to appear in the second half of next year, while the successful implementation of the memorandum signed by Athens and its creditors will gradually restore market confidence in Greece and improve the general mood in the country. Next year will be the third and last one when Greece will be in recession, with 2012 set to see growth of 1.1 percent of gross domestic product. For this year, the Commission expects the recession to deepen to 4.25 percent of GDP, up from the most recent forecast by Greece’s creditors of a 4 percent contraction.

Brussels also expects Greece’s deficit to come to 9.6 percent of GDP (or 22.3 billion euros) in 2010 and to 7.4 percent next year, although in order to achieve the target set by the memorandum for the deficit to come in at 6.5 percent in 2012, the Commission believes that the government will need to take further measures that are not included in the memorandum. Meanwhile, the government announced yesterday an extension until December 28 of the deadline for the settlement of outstanding debts by taxpayers from the years 2000 to 2009.

News source: Ekathimerini link: article

EBRD financing to Banca Intesa Beograd under warehouse receipts framework

The EBRD is extending the availability of agricultural commodity financing in Serbia, with a €10 million loan to Banca Intesa Beograd aiming to improve the access to funding for agribusinesses and promote the use of warehouse receipts. Agriculture is one of the key sectors of the Serbian economy, accounting for up to 15.5 per cent of the country’s GDP. Serbia is also the largest grain producer in the south-eastern Europe region. The facility extended to Banca Intesa is part of the EBRD’s €70 million risk sharing framework launched in July 2010 to finance the seasonal working capital needs of Serbian agricultural companies through participating partner banks. The facility will support Banca Intesa in extending financing to local agribusinesses using warehouse receipts as collateral, demonstrating the viability of lending against agricultural commodities.

“The EBRD is strongly committed to supporting the development of agricultural commodity financing and we are pleased to assist with further implementation of the warehouse receipts programme in Serbia, for the benefit of local companies in the agricultural sector”, said Peter Bryde, EBRD Deputy Director for Agribusiness. “Taking into account increased interest for agricultural loans among the companies, and the fact that the essence for successful recovery is agricultural sector, Banca Intesa gladly takes part in all projects aimed to fostering development of this sector. We anticipate that the cooperation with the EBRD will simplify the process of issuing loans to our clients and will contribute to increasing business activities in this field”, said Darko Popović, Member of the Executive Board and Head of the Corporate Banking Division of Banca Intesa Beograd.

The implementation of warehouse receipt system in Serbia is supported by considerable technical assistance grants provided by the EBRD’s Shareholder Special Fund, UN’s Food and Agricultural Organisation and USAID for training of key government stakeholders, participating banks and warehouses staff as well as for introduction of an electronic register for warehouse receipts. Since the beginning of its activity in Serbia, the EBRD has committed €2.3 billion in various sectors of the country’s economy. In the agribusiness sector alone, the EBRD has directly committed more than €6 billion in over 400 projects across central and Eastern Europe and the Commonwealth of Independent States since 1991.

News source: EBRD link: article

OECD GDP growth slows to 0.6% in the third quarter of 2010

Gross domestic product (GDP) in the OECD area grew by 0.6% in the third quarter of 2010. This marks the sixth consecutive quarter of growth, but is down on the 0.9% recorded in the second quarter. Euro area and European Union GDP grew by 0.4%, down from the 1.0% recorded in the previous quarter. At 0.7%, growth in Germany remained relatively robust but this was still sharply down on the record 2.3% growth recorded in the previous quarter. GDP growth also slowed in France (0.4%), Italy (0.2%) and the United Kingdom (0.8%). Growth rates accelerated in Japan (0.9%) and, marginally, in the United States (0.5%), compared to the previous quarter. Relative to a year earlier, GDP in the OECD area expanded by 3.1%, the same rate as in the previous quarter. 

News source: OECD link: article

Economy: Growth picking up steam but recovery uneven, says OECD Economic Outlook

Economic activity in OECD countries will gradually pick up steam over the coming two years, but the recovery will be uneven and unemployment will remain persistently high, according to the OECD’s latest Economic Outlook. With the functioning of the financial sector returning to normal and households and business in a position to renew spending and investment, the main challenge facing governments today is moving from a policy-driven recovery toward self-sustained growth.

“As stimulus is withdrawn, governments will have to provide a credible medium-term framework, to stabilise expectations and strengthen confidence, particularly for the private sector,” OECD Secretary-General Angel Gurría said. “Enhanced confidence could result in a faster-than-projected recovery.”

 

Gross domestic product (GDP) across OECD countries is projected to rise by 2.3% in 2011 and 2.8% in 2012. In the US, activity is projected to rise by 2.2% in 2011 and then by 3.1% in 2012. Euro area growth is forecast at 1.7% in 2011 and 2% in 2012, while in Japan, GDP is expected to expand by 1.7% in 2011 and by 1.3% in 2012. Emerging markets are expected to grow at a quicker pace than the OECD, helping to lift global trade growth to more than 8% annually in 2011 and 2012.

But uneven growth within the OECD area, as well as between the OECD and emerging economies, will add to global imbalances, which are among the most significant threats to the recovery. The OECD warns countries against taking unilateral action in response to exchange rate volatility, and says that international collaboration, notably within the G20 process, will be essential to warding off protectionism. The Outlook also highlights other downside risks that could derail the recovery, including the potential for renewed drops in real estate prices, most notably in the US and the UK, high sovereign debt in some countries and possible abrupt reversals in government bond yields. Going forward, the OECD recommends that countries adopt a combination of coordinated macroeconomic and structural policies to ensure the conditions for long-term growth. Fiscal consolidation is needed to reduce government deficits and debt, while making room for future fiscal policy action. Structural reforms are needed to boost growth and employment, and to contribute to budget consolidation and external rebalancing. Monetary policy must gradually return to a more normal stance.

News source: OECD link: article

Statement by the IMF Staff Mission to Bosnia and Herzegovina

An International Monetary Fund (IMF) mission led by Costas Christou visited Bosnia and Herzegovina (BiH) during November 2–15 to hold discussions with the authorities on the 4^th review under the Stand-By Arrangement (SBA). At the conclusion of the mission Mr. Christou made the following statement today in Sarajevo:

“An IMF staff mission has been assessing performance and prospects under the SBA. Following the decline in economic activity in 2009, an export-led recovery has been advancing. Output growth is expected to turn positive this year and reach 2¼ percent in 2011. Other encouraging signs include acceleration in indirect tax collections and gains in manufacturing production.

“Performance under BiH’s SBA has been broadly on track. All end-September 2010 performance criteria and structural benchmarks were observed, and achievement of the end-2010 fiscal targets, including the consolidated general government deficit of 4½ percent of GDP, is within reach. It will be essential to maintain expenditure restraint in the closing months of the year.

“Regarding the 2011 budgets, there was agreement on the consolidated general government deficit target of up to 3 percent of GDP. While the discussions on the 2011 budgets of the institutions of BiH and the Entities advanced significantly, they could not be finalized during the mission’s stay. The mission and the authorities have identified a menu of policy measures necessary to achieve the agreed target and close the remaining financing gaps. However, it is clear that full ownership and adoption of these measures will need to await the formation of the new governments.

“The mission also discussed financial sector stability issues, including stress test updates and trends in foreign parent bank exposures to BiH. There are encouraging signs that, despite adverse trends in nonperforming loans and profitability, the banking sector remains stable and adequately capitalized overall. “Discussions with the authorities will continue as soon as the formation of the new governments has advanced with a view to reaching a staff-level agreement on completing the 4^th review under the SBA.”

News source: IMF link: article